London Help to Buy – What You Need to Know

The London Help to Buy scheme is an equity loan provided by the Government. The Government can lend you up to 40% of the cost of your new build home. You will need a minimum of 5% deposit and a 55% mortgage to make up the rest.

For this scheme you must have a mortgage, which will be a first charge, as the equity loan can only be a second charge. The equity loan is for a maximum of 25 years or before if the property is sold or the mortgage is redeemed, whichever term is the shorter of the two.

You will not be charged any interest on the 40% loan for the first five years of owning your home. However, a management fee of £1 a month will be applicable from the date of purchase. From year six, a fee of 1.75% is payable on the equity loan, which rises annually by RPI (Retail Price Index) inflation plus 1%.

Example: 40% Equity Loan for a home purchased for £400,000

If the home in the example above sold for £500,000 – you would get £300,000 (60% from your mortgage and the cash deposit) and you would pay back £200,000 on the loan. You would need to pay off your mortgage with your share of the money.

Who is eligible?

London Help to Buy is available for first time buyers and homeowners looking to move.

The home you want to buy must be a new build, advertised as Help to Buy by a Help to Buy registered developer, with a maximum price of £600,000.

You must have a minimum deposit of 5% of the full purchase price.

The maximum income multiple for a Help to Buy purchase is 4.5x your household joint or single income. The mortgage taken must be on a repayment basis and can’t be interest-free.

You can’t part exchange your current home to buy a new home under Help to Buy.

You must not own any other property at the time you buy your new home with a Help to Buy equity loan.

You will not be able to sublet a home purchased under London Help to Buy.

Your property may be repossessed if you do not keep up repayments on your mortgage.

This firm charges a fee of up to £295 for mortgage advice. The amount of the fee will depend upon your circumstances and will be discussed and agreed with you at the earliest opportunity.

Lifetime Finance Group Limited trading as Super Contractors is an appointed representative of PRIMIS Mortgage Network, a trading name of First Complete Limited, which is authorised and regulated by the Financial Conduct Authority for mortgages, protection insurance and general insurance products.

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YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

Lifetime Finance Group Limited trading as Super Contractors is an Appointed Representative of PRIMIS Mortgage Network, a trading name of First Complete Limited which is authorised and regulated by the Financial Conduct Authority for mortgages, protection insurance and general insurance products. The Financial Conduct Authority does not regulate some forms of Buy to Let.

The guidance and/or advice contained in this website is subject to the UK regulatory regime and is therefore restricted to consumers based in the UK.

This website is intended for people over 18 years of age who are resident in the UK only. The website and the information contained therein should not be regarded as an offer or solicitation to conduct business in any jurisdiction other than the UK. These pages provide generic information about various aspects of financial services advice that we provide. We hope they are helpful to you but they do not on their own add up to recommendations and we cannot take responsibility for anything you do in reliance on them without further discussion with us. Please do not make a decision based upon the information contained within these pages alone. Contact us for further advice to enable you to make an informed decision based upon your individual circumstances.

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